SMSF trustees are improving their portfolio diversification with a significant increase in allocation in international shares during the first quarter of the year, according to the latest Multiport SMSF Investment Patterns Survey.
In the March 2015 quarter, holdings in international shares increased to 14.4 per cent, a 1.9 percentage point increase compared to the previous quarter. The flow of funds into international shares has seen allocation to Australian equities drop to a year-low of 38.6 per cent, down from 41.6 per cent the previous quarter.
AMP SMSF Administration Head of Technical Services Philip La Greca said the increase in international share holdings is a positive sign of increasing diversification.
“We’ve seen a significant amount of SMSF trustees take their profits from Australian equities following the dividend declaration season and re-invest into the international share market, most often through pooled vehicles.
“SMSF trustees are looking for new growth opportunities for investment, with an increasing focus on international markets. Due to the complexity of investing overseas directly, managed funds continue to be the preferred vehicle to invest overseas with 88.2 per cent of trustees investing in pooled structures.
“Due to the decrease in allocation to Australian equities, we have seen a significant drop in SMSF exposure to the most commonly held investment. While the major banks and Telstra remains the top of the list for investment, the representation of top 10 stocks in SMSF portfolios has reduced from 19 per cent to 16.8 per cent during the first quarter,” Mr La Greca said.
The first quarter of 2015 also saw the average contribution inflow per fund decrease from $13,715 in the December 2014 quarter to $6,120 in the March 2015 quarter, which is typically the lowest quarter in the financial year for SMSF contributions.
“We’ve also seen the average pension payment made by SMSFs decrease significantly for the quarter, dropping from $21,105 in December 2014 to $11,588 in March 2015, however this is largely in-line with the March quarter from previous years,” Mr La Greca said.
While the property market in some parts of Australia has continued to grow strongly, borrowing in an SMSF for a property purchase remains stable at 17.5 per cent, only a slight increase from the previous quarter at 16.1 per cent.
“Around 37 per cent of all property holders have a gearing arrangement in place, only a slight increase from 35.9 per cent in the last quarter. The average loan amount for property purchases increased $10,000 from the previous quarter to $273,000,” Mr La Greca said.
The quarterly Multiport SMSF Investment Patterns Survey covers around 2250 funds, a sample of the SMSFs Multiport administers and the investments they held at 31 March 2015. The assets of the funds surveyed represent approximately $2.6 billion.